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02 Mar
0

Senate Finance Committee Addresses TRS Funding

TRTA Calls on Senate to Restore Funding Cuts

Senators Respond with Comments in Support of Higher TRS Funding

TRTA testified in Texas Senate Finance Committee about the proposed TRS budget cuts. As TRTA members know, both Senate and House versions of the Texas legislative budget proposal suggests cutting the state contribution to the TRS pension trust fund from 6.644 percent to 6.0 percent. In addition, the proposed budget cuts TRS-Care funding in half. This reduction will cost the TRS-Care plan $300 million in state funding in the coming biennium. It may also cost TRS as much as $135 million in federal dollars that would help fund TRS-Care.

TRTA’s testimony focused on restoring the state contribution for the TRS pension trust fund and to restore TRS-Care funding, a call many members of the Senate Finance Committee echo.

State Senator Robert Duncan (R, SD-28) provided background comments on how the Texas Legislature has worked in previous years to restore balanced actuarial practices in the TRS pension fund. He also provided vital information on why the legislature passed a law requiring the state contribution to be higher than or equal to the active member contribution. Senator Duncan asked his colleagues to consider recommendations to restore TRS pension trust fund contributions to a level that is at least equal to current active member contributions.

Senator Kevin Eltife (R, SD-1) added “it is critical…” to maintain the contributions of 6.4 percent for TRS trust fund and 1 percent for TRS-Care.

Senator Bob Deuell (R, SD-2) asked several questions pertaining to the preservation of the TRS-Care program. He suggested one cost saver may be “premium assistance” for new retirees that qualify for health insurance on their spouse’s employment. The goal would be to save TRS the liability cost while providing a financial advantage to new retirees.

Ronnie Jung, TRS Executive Director, commented that the potential for increased retirements in the coming biennium may have a profound impact on the TRS-Care program. In 2004, the closure of the GPO loophole caused a spike in retirements totaling around 24,000. Director Jung suggested that the current fiscal crisis experienced by all Texas school districts could cause the number of retirements to be as high as 30,000 this year.

TRTA is meeting daily with legislators asking them to restore the funding for the TRS trust fund and the TRS-Care health insurance program. Retirees hav endured tremendous financial hardship, and legislators need to know that increasing health care premiums on retirees is simply shifting the state’s fiscal burden on to the most vulnerable. Many times it is said that TRS retirees are on fixed incomes, but with the increased federal tax burden, the loss of buying power due to no cost of living increases, and now the threat of increased health care premiums, TRS retirees have DIMINISHING incomes. TRTA is challenging the legislature to restore funding and think of new and bold ways to help TRS retirees.

Something to Work For!

Representative Jose Menendez (D, HD-124) has filed House Bill 1699 as a way to provide TRS retirees with a supplemental payment this session. The bill requires TRS to provide retirees with a supplemental check similar to the one provided in 2007. Under the measure, a retiree would receive an additional annuity payment equal to one month’s payment, not to exceed $2,400.

The bill does not use general revenue funds, and puts a temporary exception on the requirement that the system be actuarially sound to make the payment. Presently, the TRS pension trust fund has $106 billion in assets. The legislature is not considering any plan that would make fund actuarially sound this coming biennium. Representative Menendez knows that many retirees are suffering from severe financial distress and some effort MUST be made to try to help them this session. While we would all prefer the system be actuarially sound when suggesting a supplemental payment, retirees are being provided little hope for an increase this session if budget writers maintain their cuts for the pension fund. Representative Menendez is doing what he can to advance an idea that would provide real financial assistance to thousands of retirees this session.

TRTA supports this measure and looks forward to helping it move through the legislative process.

TRTA Efforts are Making a Difference

TRTA member outreach efforts are resonating in the legislature. Continued communication from retirees is vital to our legislative success. Thank you for your effort.

Tomorrow, TRTA will update you on a bill that has just been filed that calls for newly hired public employees to no longer pay into the traditional defined benefit plan. Instead, public employees (including education employees) would be required to pay into a 401 (k) style retirement plan. The bill is HB 1974 filed by Representative Kenneth Sheets (R, HD-107). In the bill, though, legislators and judges will still pay into traditional defined benefit retirement plans. Again, we will provide a complete update tomorrow on this newly filed bill.

Thank you for your hard work and continued support of the Texas Retired Teachers Association.

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22 Feb
0

Pensions Committee Update–February 22, 2011

TRTA Advocates for Protection of the Pension Trust and Retiree Health Care

House PIFS Committee Told Care Premiums May be on the Rise

The House Pensions, Investments, and Financial Services (PIFS) committee met today to hear invited testimony from state, county, and municipal pension fund directors, as well as to receive invited testimony from many constituent groups representing trust members.

Tim Lee, Executive Director of the Texas Retired Teachers Association (TRTA), testified on behalf of the association. As this was an organizational meeting for the PIFS Committee, Mr. Lee provided oral testimony on what the Texas Retired Teachers Association does for its members and how we operate as a statewide association. Mr. Lee also provided written testimony on issues relating to Teacher Retirement System of Texas (TRS) and retired public education employees. Several of these comments are provided below.

  • The TRS plan is not experiencing a funding crisis, and has rebounded very well after the major decline in its assets in 2008;
  • While the fund is not in financial crisis similar to other states, the TRS plan is not actuarially sound;
  • The plans to reduce funding for the TRS pension trust fund and the TRS-Care plan will have a significant and negative impact on both funds;
  • TRS retirees have been hit hard by inflationary pressure, as well as increased federal tax withholdings;
  • Many retirees are receiving much less in their annual retirement than what they were receiving when they may have retired;
  • TRS provides economic security for 1.3 million Texans, but it also provides a large economic benefit for all Texans;
  • TRS RETIREES HAVE NOT HAD A TRUE COST OF LIVING INCREASE SINCE 2001.

TRTA testimony stated that Texas does not have a crisis in its pension funding based on overly generous benefits or excessive cost, but Texas public education retirees are experiencing a crisis in loss of buying power and threat of decreased health care funding. These are the issues Texas lawmakers need to find ways to address this session.

Many TRTA members echoed these sentiments in email responses and TRTA Facebook postings. In addition to the above comments, our written testimony included some information from TRTA members that addressed the federal tax table change, how increased medical costs are impacting retirees, and the need to maintain state funding for the TRS pension trust fund.

Thank you to all TRTA members that posted their comments on our Facebook page or who sent an email. This was a great resource in preparing today’s testimony.

Possible TRS-Care Increase

TRTA is working hard to restore funding for the TRS-Care program. We are very appreciative of all the active education constituent groups that are also making this a top priority this session. TRS has already voted to increase premiums on Active Care participants (a plan designed for active school employees) by 9.5 percent. With proposed budget scenario that cuts TRS-Care funding in half, premium increases for TRS retirees is a paramount concern for TRTA.

In public testimony before the House PIFS Committee today, TRS Executive Director Ronnie Jung said that the cost share for retirees for TRS-Care could be much higher, especially if the state reduces its contribution rate. The increase would be based on several factors:

  • State contribution decreases from 1 percent to 0.5 percent of the aggregate active teacher payroll;
  • This would account for a loss of approximately $150 million each year of the biennium (or $300 million in total);
  • The TRS-Care plan may be eligible to receive as much as $135 million per year from the federal government early retirement reinsurance program if the legislation is not declared unconstitutional and implementation remains on track;
  • The federal dollars will likely be lost, though, if the state cannot certify maintenance of effort for funding TRS-Care at levels similar to previous biennia;
  • This results in a potential maximum loss of $285 million per year that may need to be restored through other funding resources to maintain the level of benefits already provided by TRS-Care;
  • The result could be an increase in TRS-Care retiree cost share as high as 50 percent in the coming biennium.

While it was stressed that these are “worse case scenarios” and that premiums “may” increase, the obvious conclusion is that reduced contributions for TRS-Care translates into significant premium increases for plan participants sooner than later.

TRTA staff and volunteer leaders are working everyday to send a positive message to legislators on how beneficial the TRS plan is for its members and for all Texans. Good progress is being made and MANY legislators are commenting on the excellent communication they are receiving from their TRTA constituents. Thank you for this hard work. As we move through the next several weeks, the budget process will continue to move forward and we will work diligently to restore the proposed cuts to the TRS pension trust fund and the TRS-Care program. In addition, we will add our “TRTA Bill Tracker” to the web site and provide specific information on legislation designed to help TRS retirees this coming biennium. We are so grateful for your membership and look forward to continuing these efforts throughout this legislative session.

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21 Feb
0

House Pensions Committee Meeting Tomorrow

The House Pensions, Investments, and Financial Services (PIFS) Committee will conduct its first meeting tomorrow, February 22, 2011. Representative Vicki Truitt returns as Chairwoman for the PIFS Committee. TRTA has been invited to share some brief comments on the issues most important to our members this session.

Tim Lee, TRTA Executive Director, will represent TRTA at this hearing. TRTA is very concerned about the proposal to reduce funding for the TRS pension trust fund, as well as the TRS-Care health insurance program. In addition, TRTA members know that TRS retirees have not had a pension increase in 10 years. With no pension increase in 10 years and the decrease in fixed incomes due to increased federal taxes, TRS retirees need some form of benefit increase.

TRTA is your voice in the Texas Legislature. Many TRTA members have contacted us with issues and items they want the legislature to be focused on during this session. If you would like to send your ideas on items that TRTA should bring before the House Pensions Investments and Financial Services Committee, please send a short email with your comments and we will do our best to bring these issues to the attention of the committee members.

In addition, you may want to leave some suggestions or comments on the TRTA Facebook page by clicking here. We will provide a complete update after tomorrow’s meeting.

So far this session, TRTA members have sent more than 30,000 emails to legislators asking for them to make public education retirees a priority this session. We are so appreciative of your help and support. Thank you for all you do to keep Texas Retired Teachers Association a strong voice for all public education retirees.

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